A 220% tax on Bombardier CSeries sales

Washington announced Tuesday a 220% tax on Bombardier (TSX: BBD) on the sale of its CSeries aircraft in the United States. This decision, which was expected, is a victory for its American competitor Boeing Co. The US giant had filed a complaint with the Commerce Department and the International Trade Commission (ITC) last April for the US to take action against Bombardier , of which it considers unfair practices [1]. Since opening markets on Wednesday, the Bombardier stock has dropped by more than 13% [2].

Olivier Marcil, Bombardier’s Vice-President of External Relations, replied on Tuesday afternoon: “This is a ridiculous figure that shows how much Boeing knew about what it was doing by filing a complaint with the US Department of Commerce.” [1]. One can understand Bombardier’s frustration as a result of this decision, which the most pessimistic observer had predicted only a third of the rate granted.

This tax jeopardizes the order of 75 CS100 aircraft taken by Delta Air Lines scheduled for spring 2018. This order was the entry point of the CSeries into the US market and was hoped to lead to other aircraft orders from builder.

This is a sad news for Bombardier, which seemed to be doing better and penetrating the American market. It is all the more strange to see Boeing attacking the Canadian company, especially since the american company had not submitted an offer for the Delta Air Lines contract. Hopefully, the order of the CS100 by the US carrier Delta does not point to a cancellation.